Bloomberg News

Supreme Court Says Canada Doesn’t Share Tobacco Liability

July 29, 2011

(Updates with background of cases from second paragraph, quote from decision in third paragraph.)

July 29 (Bloomberg) -- Canada’s Supreme Court ruled unanimously that the federal government doesn’t have to share liability with tobacco companies for health costs related to smoking.

The country’s top court was asked to rule on two cases that raised the issue of whether the federal government should be partially liable for the costs stemming from the health problems of smokers.

“The facts as pleaded do not bring Canada’s relationship with consumers and the tobacco companies within a settled category of negligent misrepresentation,” the court wrote in its decision today.

In the first case, smokers in British Columbia began a class-action, or group, lawsuit against the Canadian unit of Imperial Tobacco Group Ltd., alleging that the company’s description of cigarettes as “light” or “mild” was misleading. The consumers asked Imperial to refund the money they spent on such cigarettes.

Imperial asked the court to add the federal government as a defendant, saying Canada’s health department encouraged the company to develop and promote light cigarettes and vouched for the relative safety of light brands. Canada collected license fees and royalties on tobacco strains developed by Canada for use in light cigarettes, according to Imperial.

Cost Recovery

The second case stems from a 2001 suit by the B.C. government against 14 tobacco manufacturers, including Rothmans Inc. and R.J. Reynolds Tobacco Co., seeking recovery of money spent by the province on health care stemming from tobacco- related diseases. Nine of the companies argued that the federal government be included as a defendant, saying it should be liable for some of the costs.

Today’s rulings overturned split decisions by the B.C. Court of Appeal in 2009, which had been in favor of the companies in both cases.

The cases are Attorney General of Canada versus the Queen in Right of British Columbia, number 33563, and the Queen in Right of Canada versus Imperial Tobacco Canada Ltd., number 33559.

--Editors: Paul Badertscher, Andrew Dunn

To contact the reporter on this story: Andrew Mayeda in Ottawa at amayeda@bloomberg.net.

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.


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